Uncovering Fintech Apps: The Paradox of Loan Advertisement and Personal Finance Management

The Mint's sudden closure has drawn attention to the development pattern of Personal Finance Management Applications (PFMAs). Examining the potential conflicts of interest in the design of financial management tools holds substantive theoretical and empirical importance. This paper investigates the effects of exposure to loan advertisements within PFMAs on users' borrowing activity and financial well-being. Using banking transaction data, we find that PFMA users exposed to loan advertisements exhibit a pronounced increase in monthly loan amounts, number of loans, and loan penalty interest due to delayed repayments, demonstrating a potential adverse effect. Further tests reveal that users tend to borrow suboptimal loans from the advertising FinTech lenders. Furthermore, loan advertisements pose significant challenges to users' self-control. Our results reveal that the profit model of PFMAs with loan advertisements may contradict users' budgeting goals, suggesting a need for adjustments in the selection and regulation of these advertisements.